It also requested the ability to potentially sell its stake in Kiwibank to whoever it wished.
However, the Finance Minister at the time, Grant Robertson, wanted Kiwibank to be 100% New Zealand owned, so declined the Super Fund’s pitch.
With Kiwibank’s other co-owners, NZ Post and the Accident Compensation Corporation (ACC), wanting out of the investment, the Crown ended up buying Kiwibank outright in 2022 for $2.1 billion.
Willis is now considering going back to the Super Fund and ACC to ask if they’d like to reinvest in Kiwibank.
She’s also weighing up welcoming capital from other investors, including KiwiSaver providers and iwi, and/or partially floating the bank on the New Zealand stock exchange (NZX).
She hasn’t formally talked to potential investors, nor come close to making any decisions — yet.
National’s coalition partners are supportive of Willis’ position. Act has always been keen to part-privatise Kiwibank. Meanwhile, NZ First’s Shane Jones is happy to look at the options.
The three potential investors the Herald spoke to expressed varying degrees of eagerness in the prospect of buying into Kiwibank.
The comment they all made was that any conditions the Government put on the shares, like limiting foreign ownership for example, would be priced in.
The more onerous the conditions, the lower the share price.
Potential investor #1: NZ Super Fund, sovereign wealth fund
Super Fund head of direct investments Will Goodwin said it was fairly common for governments to put protections around assets of national significance, but noted they were generally open to having a broad set of shareholders.
“A lot of international capital brings a lot of capability with it,” he said.
“As soon as you start restricting the buyer pool, that in itself limits the ability to bring new capability in.”
Goodwin also made the point there is only a small pool of New Zealand investors big enough to buy a large investment from the Super Fund.
“As soon as you put constraints on, it just makes it a lot harder,” he said.
Indeed, when ACC sold its 22% stake in Kiwibank to the Crown in 2022, it noted this was the biggest single investment in its portfolio, which was otherwise “extremely” diversified.
Goodwin said the Super Fund would weigh up a potential opportunity to invest in Kiwibank as it would any other investment.
The Super Fund operates independently from the Government with the aim of maximising returns.
With about 14% of its $75b portfolio invested in New Zealand assets, it actively looks for local investment opportunities.
Potential investor #2: Salt Funds, investment manager
Salt Funds managing director Matthew Goodson was keen to see Kiwibank floated, noting how under-represented the financial sector is on the NZX versus the ASX.
He believed restricting foreign ownership in Kiwibank, to say 50%, would be fine, but 10% or 20% would be tricky.
What if the Government gave Kiwibank other directives, such as to lend more to businesses and the rural sector, which struggle to get loans from big banks focused on lower-risk mortgage lending?
“You can put any conditions you like on it, but the market will reflect that in the price,” Goodson said.
He was also frank — before investing, he would need to be confident Kiwibank would deliver good returns.
“I’m not sure how keen I’d be for Kiwibank to go wading [further] into business lending,” he said.
“It would be a good thing for the economy, but not such a good thing for me as an investor.”
Potential investor #3: Simplicity, investment manager, including KiwiSaver
Simplicity managing director Sam Stubbs expressed a lot of interest in investing in Kiwibank.
He was passionate about seeing the bank grow to enhance competition in the sector.
He was unconcerned about this growth potentially coming from Kiwibank lending to riskier borrowers, saying banks had become overly risk averse.
Stubbs said the biggest issue for Kiwibank would be balancing being a disrupter with satisfying shareholders.
As Goodson said, returns were key for investors, and concentrating lending in the mortgage market had proved lucrative for the big four banks.
Stubbs wasn’t too bothered by the prospect of limiting foreign investment in Kiwibank, believing there was enough wealth in New Zealand for investors to reasonably have someone to sell to, should they wish to divest.
He acknowledged that 10 years ago this wouldn’t have been the case. But with KiwiSaver large ($115b funds under management) and growing, Stubbs believed Kiwibank could remain New Zealand owned.
Jenée Tibshraeny is the Herald’s Wellington business editor based in the parliamentary press gallery. She specialises in government and Reserve Bank policymaking, economics and banking.
